Stock Market Today: Markets Recover From Worst Levels but Portugal Concerns Remain
NEW YORK (TheStreet) -- U.S. markets climbed out of session lows by market close, but stayed in the red for the day. Investors remained wary of a European selloff triggered by deepening Portugal banking concerns.
Portugal's 10-year bond yield spiked to 3.97%, its highest point since April, after the nation's biggest bank Banco Espirito Santo and controlling shareholder Espirito Santo Financial Group commented on "ongoing material difficulties."
Moody's downgraded Espirito to Caa2 from B2, noting its rating was still on review for a further downgrade. The firm said the move reflects a "higher credit risk profile" and that concerns for its creditworthiness have been heightened by the bank's lack of transparency.
European stocks tumbled on the news and also weakened by a 2.3% decline in French manufacturing and a 1.2% drop in Italian industrial output, its biggest fall since late 2012.The Bank of England decided Thursday to maintain interest rates at a record low of 0.5%. "The market shrugged off the rising cost of financing Portugal's debt yesterday and we suspect it's playing catch up, as Alcoa (AA) and Fed minutes fade," said Peter Cardillo, chief market economist at Rockwell Global Capital. "This type of action suggests a summer trading range is being established," he added. July 10 Premarket Briefing: 10 Things You Should Know European Stocks Tumble on Disappointing Data Stock Market Today: Markets Pop as Fed Alludes to End of Stimulus Weaker-than-expected earnings reports were not helping to lift domestic markets out of the doldrums. Family Dollar (FDO) posted a quarterly profit decline of 33% and missed earnings estimates by 4 cents at 85 cents a share. The results reflect economic challenges facing its core customer and an intensely competitive environment. Likewise, Potbelly (PBPB) shares dived 25.1% after the sandwich chain's warning that it expects weak sales for its fiscal second quarter. The Dow Jones Industrial Average closed 0.42% lower to 16,915.07. The S&P 500 gave up 0.41% to 1,964.68. The Nasdaq stumbled 0.52% to 4,396.2. Markets gained ground Wednesday after the release of the much-watched minutes of the Federal Reserve's chief policy-making committee showed that the central bank is preparing to end its historic program of monetary easing as soon as October. Jobless claims for the week ended July 5 fell by 11,000 to 304,000, vs. the consensus target of 315,000. Wholesale inventories for May climbed 0.5%, more than half April's 1.1% increase and slightly below economists' estimates for a 0.6% gain. Bank of America (BAC) shares shed 1% after U.S. Attorney General Eric Holder refused to meet with Bank of America CEO Brian Moynihan to resolve probes into shoddy mortgage securities, Reuters reported. Sarepta Therapeutics (SRPT) was sinking 12.9% after publishing discouraging data from its Phase II study of an experimental drug designed to treat muscular dystrophy. American Apparel (APP) shares were gaining 18.9% after the company reached a deal with investment firm Standard General to receive an investment of up to $25 million to boost the clothing chain's finances. The agreement will also mean a shake-up of American Apparel's board. United Continental (UAL) popped 12.7% after issuing a positive forecast for the second quarter. The airline expects second-quarter unit revenue to be up 3.5% from the year-ago quarter, above its previous forecast of an increase of 1% to 3%. Costco (COST) added 0.14% after same-store sales for June rose 6%. Wall Street had estimated a 5.3% increase. Serving as a testament to Big Blue's commitment to get on the leading side of cloud innovation, IBM announced it will invest $3 billion over the next five years in two broad research and early stage development programs for chip technology. The research focuses on making semiconductors more efficient for cloud computing and Big Data systems. Shares were down 0.38%. --By Keris Alison Lahiff and Andrea Tse in New York
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